Govt drives out of Maruti with Rs 2,360 cr

TNNMay 11, 2007, 03.33am IST

NEW DELHI: The government on Thursday divested its entire holding in Maruti Udyog (MUL) by selling the residual 10.27% stake for Rs 2,360 crore to a clutch of financial institutions led by Life Insurance Corp (LIC).

"We have sold the entire lot of shares held by the government in MUL at an average price of Rs 797 a share to raise Rs 2,360 crore," minister of heavy industries and public enterprises Santosh Mohan Dev told reporters after the bids were opened. MUL scrip closed at Rs 764.65 on the bourses.

The government had fixed a floor price of Rs 760 per share for the sale. The government had offered 2.96 crore shares in the company, representing 10.27% stake. LIC got 1.3 crore shares at a price of Rs 800 per share. The country's biggest insurer, which earlier held 8.1%, would now own 12.5%.

It would now be the second-largest shareholder in the company. The government sold the shares in a French auction, in which bidders paid the price they bid, instead of a common cut-off price. In all, 32 financial institutions and mutual funds were allotted shares.

State Bank of India (SBI) was the second most-successful bidder and got 83 lakh shares at Rs 775 per share. Along with LIC and SBI, Corporation Bank and Union Bank of India had also put in bids for buying the government stake in MUL.

"The shares would, however, be transferred to LIC in September when the shareholders of Suzuki Motor Corp (SMC), which owns the company, amends the Articles of Association. SMC officials have already given a go-ahead to LIC, increasing its stake in MUL to over 10%," department of disinvestment secretary PV Bhide said.

Corporation Bank and Exim Bank have been granted 5.88 lakh and 1.18 lakh shares each. The two banks submitted the highest bids at Rs 850 per share. Among mutual funds bidding for the stake, Reliance MF and HDFC MF have been given 20 lakh and 10 lakh shares, respectively.

They had quoted Rs 790 and Rs 782 per share. SBI MF got 49.76 lakh shares for Rs 775 per share and Punjab National Bank 12.29 lakh shares at Rs 815 per share.